Payroll Hub · Simple employer guide
When does employer-paid car fuel become taxable?
Understand private fuel, employee repayments and what to record when fuel stops.
Best for: Business owners and people working in payroll, finance or HR
- Plain-English guide
- Reviewed 11 August 2026
In simple terms
Status: HMRC interim guidanceFrom April 2027, taxable company-car fuel will be included through payroll. A separate fuel benefit can arise when the employer pays for private journeys, and it is not simply the cost of fuel used. Record when private fuel starts or stops and any amount the employee repays.
What happens when private fuel stops?
Tell payroll the date private fuel was genuinely withdrawn. Do not leave fuel permanently attached to the car record, because that can continue the tax charge after the benefit has ended.
Does employee reimbursement remove the benefit?
It can, but only if the employee repays the right amount within HMRC’s rules. Keep the payment dates and evidence rather than assuming an informal repayment removes the benefit.
Optional detail
Official guidance behind this answer
The short answers above are enough to get started. Open these sections only if you need to check the current HMRC position or source.
What Benefits in Kind must be payrolled from 6 April 2027?
Status: HMRC interim guidanceFrom 6 April 2027, HMRC says employers will need to put company cars, car fuel, vans, van fuel and employer-provided medical benefits through payroll.
Read the full answer and official source
These are the first five benefit groups in the change. HMRC currently plans to add most other Benefits in Kind from April 2028, while loans and accommodation will continue to have separate arrangements.
Source: HM Revenue and Customs — The phased introduction of mandatory payrolling for benefits in kind
Source updated: . Workmax reviewed: .
What information will employers report through FPS?
Status: Draft HMRC technical specificationHMRC has published a draft list of benefit information that payroll software may need to send. Employers can start gathering the information, but the final list may still change.
Read the full answer and official source
The draft includes benefit values, employer Class 1A amounts and extra details for particular benefits. Company cars need the most information, including vehicle and availability details.
Source updated: . Workmax reviewed: .
Plain-English Benefits in Kind glossary
- Benefit in Kind (BiK)
- A non-cash benefit or expense provided by an employer that may create an Income Tax liability.
- Payrolling benefits
- Including a benefit's taxable value in payroll so Income Tax is collected through PAYE.
- Cash equivalent
- The statutory taxable value of a benefit, which may differ from its purchase price or cash cost.
- Class 1A NIC
- An employer National Insurance liability charged on many taxable benefits and expenses.
- P11D
- The end-of-year form traditionally used to report taxable expenses and benefits for an employee.
- FPS
- The Full Payment Submission employers send through Real Time Information when payroll is reported to HMRC.
